Indonesia may join the Trans Pacific Partnership in the coming years. The country’s textile industry is ready for the partnership as it is already structured from its upstream to downstream. Indonesia feels the TPP could more than double its textile exports in a decade as the US is one of its major markets.
However, the yarn-forward clause in TPP is making them wary. This provision in the TPP will cut tariffs only for garment products made using materials sourced from member countries. In other words, textile and apparel products made using TPP members’ yarns and fabrics will qualify for zero-tariff in trade among the member countries.
However, Indonesia still imports a total of $8.6 billion in the form of fiber, yarn, fabric, garments, tapestry and other textile products, with a big chunk estimated to come from China, which is not a TPP member. Vietnam, which is one of the TPP signatories, has raised concerns about the yarn-forward rule of origin as it still imports some types of fabric from China.
The TPP currently has 12 signatory countries, namely Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the US.